Alt-A, Interest Only Loans Fade Away

June 16, 2009 No Comments »


Despite residential lending holding up pretty well during the first quarter (thanks to the record low mortgage rates), Alt-A and interest-only lending dropped off a cliff, according to data compiled by National Mortgage News.

Total residential home loan production was off just 12 percent in the first quarter of 2009 compared to a year earlier, but the large majority of loans were government-backed by Fannie, Freddie, or the FHA.

Alt-A lending accounted for just over $806 million in loan production, with mortgage lender Flagstar Bank originating a hefty $564 million.

Bank of America was a distant second with $21 million, followed by ResCap with $18 million.

In 2008, Alt-A loan production totaled $60 billion; such lending peaked at a staggering $612 billion in 2006.

Interest-only lending
has also plummeted, with just $8.8 billion funded during the first quarter, down 72 percent from a year earlier.

Wells Fargo and PHH Mortgage were the top interest-only lenders, with $2.3 billion and $2 billion in production, respectively, and Union Bank of California was a distant third with $703 million.

Oh and in case you were wondering, non-GSE subprime lending was “non-existent” in the quarter; in fact, I don’t think NMN even reports it anymore.

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